US Dollar Index (DX) Futures Technical Analysis – July 3, 2017 Forecast

The September U.S. Dollar Index is coming back with a vengeance on Monday after a steep sell-off last week. Profit-taking and short-covering are behind the move. Investors may be realizing that last week’s sell-off was triggered by hawkish talk from a few central bankers, while the U.S. Federal Reserve is the only central bank actually taking action toward raising interest rates.

Technical Analysis

The main trend is down according to the daily swing chart. However, Friday’s closing price reversal bottom signaled a shift in momentum to the upside. The chart pattern was confirmed earlier today when buyers took out Friday’s high at 95.565.

A trade through 95.475 will signal a resumption of the downtrend and negate the closing price reversal bottom.

The main range is 97.515 to 95.475. If the upside momentum continues then we could see a test of its retracement zone at 96.495 to 96.74 over the near-term.

Forecast

Based on the current price at 95.80, the direction of the index the rest of the session is likely to be determined by trader reaction to the former bottom at the same price. This price is important because those who sold short when the market took out this price last week may be forced to cover, or forced to hold on to a losing position.

Overcoming 95.80 will indicate the presence of buyers. This could create enough upside momentum to challenge the downtrending angle at 96.39. This is followed by the 50% level at 96.495.

The inability to overcome 95.80 will signal the return of sellers. This could lead to further downside pressure with the next target the reversal bottom at 95.475. Crossing to the weak side of the steep downtrending angle at 95.27 will put the index in an extremely bearish position.